Circular No 147/2011 Dated 12 July 2011 To all Members of the Malaysian Bar Anti-Money Laundering and Anti-Terrorism Financing

Act 2001: Checklist for Legal Firms and Compliance Report Bank Negara Malaysia (BNM), the competent authority under the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA), conducted on-site examinations on selected legal firms from 16 Aug to 2 Sept 2010, and found law firms compliance with AMLATFA and the guidelines issued thereunder to be weak. To improve the level of compliance, Bar Council has formulated a checklist to assist Members in working their way through the Know Your Client guidelines issued by BNM pursuant to AMLATFA. Prior to opening a clients file, Members are advised to ask certain questions on the proposed transactions that their legal firms have been instructed to act upon. Members should go through the items listed in the checklist to ensure that all necessary information has been obtained. This checklist should be kept with every new clients file and shown to BNM during an on-site examination. Further, in order to monitor the level of compliance, BNM has sought Bar Councils assistance to urge law firms to complete and submit an AMLATFA Compliance Report on BNMs website on a yearly basis. The Compliance Report is law firm based and requires a partner/managing partner/sole proprietor selected by the firm to submit on behalf of all the lawyers in the law firm. The website link to submit the Compliance Report on BNMs website will be provided to Members at a later date. Law firms are strongly urged to register on BNMs website and complete the Compliance Report to ensure compliance with AMLATFA. Failure to comply could lead to BNM imposing more intrusive directives on all law firms, including legal penalties for noncompliance. Please note that Members will be asked to indicate in their 2012 Bar Council Sijil Annual Application Form Checklist whether their law firms have submitted the Compliance Report. Attached please find the checklist for law firms, in English and Bahasa Malaysia versions, and the Guidelines on Anti-Money Laundering and Anti-Terrorism Financing issued by Bar Council. Thank you. Tony Woon Yeow Thong Secretary Malaysian Bar

ANTI-MONEY LAUNDERING AND ANTI-TERRORISM ACT 2001 CHECKLIST YES A. 1. 1.1 1.2 1.3 1.4 PREVIEW OF TRANSACTION Does this transaction involve: buying and selling of immovable property managing of client money, securities or other property managing of accounts including savings and securities accounts organising of contributions for the creation, operation or management of companies creating, operating or managing of legal entities or arrangements and buying and selling of business entities acting as a company secretary in the course of providing any of the following services to third parties: 1.6.1 1.6.2 acting as a formation agent of legal entities acting as (or arranging for another person to act as) a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal entities providing a registered office, business address or accommodation, correspondence or administrative address for a company, a partnership or any other person or arrangement acting as (or arranging for another person to act as) a trustee of an express trust acting as (or arranging for another person to act as) a nominee shareholder for another person

NO

1.5

1.6

1.6.3

1.6.4 1.6.5

If the answer to any part of Question 1 is YES, then this transaction falls within the ambit of the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 as it applies to advocates and solicitors.

B. 2.1

PARTIES TO THE TRANSACTION Are you aware of the identity of the person(s) from the client whom you are receiving instructions in respect of this transaction? Are you aware of the identity of the other person(s) or party(ies) involved in this transaction?

2.2

YES 2.3 Have you to the extent possible obtained the following information or copies of the following documents from the client? 2.3.1 names and aliases 2.3.2 identification documents such as identity cards and passports 2.3.3 place of residence 2.3.4 particulars of employment 2.3.5 occupation and business activities 2.3.6 country of origin and residence 2.3.7 company registration number 2.3.8 tax and revenue references

NO

[Note: A profile on the identity and background of the client and other persons involved in the transaction should be compiled for each transaction.] 2.4 In the case of the client who is not a Malaysian citizen or resident, have you considered the clients: 2.4.1 2.4.2 connection with Malaysia history of acquaintance and development of relationship with Malaysian individuals and entities.

[Note: In the case of other parties involved in the transaction, it may not be convenient or appropriate to demand information to the same extent but information should be gathered along similar lines. In any case, an advocate & solicitor is entitled as against any party to expect a reasonable amount of information in order to enable him/her to verify if nothing else the identity and the validity of such acts and deeds of the party involved as may affect the interest of his client.] 3. Are there any circumstances concerning the parties to the transaction which gives reason to suspect that the parties are involved in an unlawful activity?

C. 4. 4.1 4.2 4.3

PROFILE OF TRANSACTION In reviewing the proposed transaction, have you considered: Whether any party is or appears to be a mere nominee or agent. The intended effect of the transaction. The purport of documents used in the transaction.

YES 4.4 4.5 The consideration or bargain. Whether the purport of the documents are consistent with the intended effect of the transaction. Whether any aspect of the transaction is in any way misdescribed or is a misnomer. Whether the consideration appears to be real and sufficient on an arm's length basis or for some acceptable reason is not unusual. Are there any concerns regarding the nature of the documentation related to this transaction which give reason to suspect that the transaction is not genuine and/or involves proceeds of an unlawful activity? In reviewing the other circumstances surrounding the proposed transaction, have you considered or noted: Lacunas or missing elements in the transaction. Misnomers and disguises. Inconsistencies with what would be expected of such a transaction. Unexplained elements. Any unusual reluctance to provide information. Any information provided which invites scepticism. Any element which gives the transaction an unusual or extraordinary aspect. Any special unique or exclusive elements provided by any party as rendering the particular transaction special unique. Any unusual or extraordinary requirements for secrecy and confidentiality. Any casualness with matters of importance. Is there anything in relation to the other circumstances of the proposed transaction which gives reason to suspect that the transaction is not genuine?

NO

4.6

4.7

5.

6.

6.1 6.2 6.3 6.4 6.5 6.6 6.7

6.8

6.9

6.10 7.

D. 8.

PROGNOSIS OF TRANSACTION Based on the review of the proposed transaction, do you have any concerns about the proposed transaction? If the answer to Question 8 is YES, have you discussed your concerns with any other advocate and solicitor in your firm?

YES

NO

9.

10.

What conclusion have you arrived at in respect of these concerns? In particular, do you feel that a Suspicious Transaction Report should be filed?

SENARAI SEMAK AKTA PENCEGAHAN PENGUBAHAN WANG HARAM DAN PENCEGAHAN PEMBIAYAAN KEGANASAN 2001 A. 1. 1.1 1.2 1.3 1.4 KAJIAN AWAL URUS NIAGA Adakah urus niaga ini melibatkan urusan: membeli dan menjual harta tak alih menguruskan wang, sekuriti atau harta lain pelanggan menguruskan akaun termasuk akaun simpanan dan sekuriti mengendalikan sumbangan untuk penubuhan, operasi atau pengurusan syarikat mewujudkan, mengendalikan atau menguruskan entiti atau urusan yang berkaitan dengan undang-undang serta membeli dan menjual entiti perniagaan bertindak sebagai setiausaha syarikat dalam proses menyediakan apa-apa khidmat berikut kepada pihak ketiga: 1.6.1 bertindak sebagai ejen pembentukan entiti undang-undang 1.6.2 bertindak sebagai (atau mengaturkan orang lain supaya bertindak sebagai) pengarah atau setiausaha syarikat, rakan niaga perkongsian atau jawatan serupa yang berkaitan dengan entiti undang-undang lain 1.6.3 menyediakan pejabat berdaftar, alamat perniagaan atau alamat tempat tinggal, surat-menyurat atau pentadbiran untuk syarikat, perkongsian atau mana-mana orang atau apa-apa urusan lain 1.6.4 bertindak sebagai (atau mengaturkan orang lain supaya bertindak sebagai) pemegang amanah bagi amanah nyata YA TIDAK

1.5

1.6

YA TIDAK 1.6.5 bertindak sebagai (atau mengaturkan orang lain supaya bertindak sebagai) pemegang saham namaan bagi orang lain Jika jawapan bagi mana-mana bahagian dalam Soalan 1 ialah YA, maka urus niaga ini termasuk dalam lingkungan Akta Pencegahan Pengubahan Wang Haram dan Pencegahan Pembiayaan Keganasan 2001 kerana ia terpakai untuk peguam bela dan peguam cara. B. 2.1 PIHAK DALAM URUS NIAGA Adakah anda tahu tentang identiti individu dari pihak pelanggan yang memberi anda arahan berhubung dengan urus niaga ini? 2.2 Adakah anda tahu tentang identiti individu atau pihak lain yang terlibat dalam urus niaga ini? 2.3 Adakah anda, setakat yang mungkin, telah menerima maklumat berikut atau salinan bagi dokumen berikut daripada pelanggan? 2.3.1 nama dan alias (nama lain) 2.3.2 dokumen pengenalan diri seperti kad pengenalan dan passport 2.3.3 tempat tinggal 2.3.4 butiran pekerjaan 2.3.5 pekerjaan dan aktiviti perniagaan 2.3.6 negara asal dan tempat tinggal 2.3.7 nombor pendaftaran syarikat 2.3.8 rujukan cukai dan pendapatan

[Nota: Profil identiti dan latar belakang pelanggan serta orang lain yang terlibat dalam urus niaga hendaklah disusun bagi setiap urus niaga.]

2.4

Jika pelanggan bukan warganegara Malaysia atau tidak bermastautin di Malaysia, sudahkah anda meneliti: 2.4.1 hubungan pelanggan dengan Malaysia 2.4.2 sejarah urus niaga dan perkembangan urus niaga antara pelanggan dengan individu dan entiti Malaysia.

[Nota: Jika beberapa pihak lain terlibat dalam urus niaga, ia mungkin tidak mudah atau wajar untuk meminta maklumat sebegitu tetapi maklumat yang lebih kurang sama hendaklah diperoleh. Dalam apa-apa hal, peguam bela & peguam cara berhak mendapatkan daripada mana-mana pihak jumlah maklumat yang wajar bagi membolehkannya mengesahkan, jika tiada apa-apa perkara lain, identiti dan kesahihan akta dan surat ikatan pihak yang terlibat yang boleh menjejaskan kepentingan pelanggannya.]

3. Adakah terdapat apa-apa keadaan berkenaan dengan pihak dalam urus niaga tersebut yang memberikan sebab untuk mengesyaki bahawa pihak tersebut terlibat dalam aktiviti yang menyalahi undang-undang? C. 4. PROFIL URUS NIAGA Dalam mengkaji semula urus niaga yang dicadangkan, sudahkah anda menimbangkan:

YA TIDAK 4.1 Sama ada mana-mana pihak merupakan atau didapati menjadi penama atau ejen sahaja. 4.2 4.3 4.4 4.5 Kesan yang diharapkan daripada urus niaga tersebut. Maksud dokumen yang digunakan dalam urus niaga. Pertimbangan atau tawar-menawar. Sama ada maksud dokumen selaras dengan kesan yang diharapkan dalam urus niaga. 4.6 Sama ada apa-apa aspek urus niaga dalam apa jua cara tersalah hurai atau tidak padan namanya. 4.7 Sama ada pertimbangan nampaknya nyata dan mencukupi berdasarkan prinsip urus niaga tulus atau, bagi sesetengah sebab yang boleh diterima, ia adalah lazim.

5.

Adakah terdapat apa-apa kebimbangan bagi ciri dokumen yang berkaitan dengan urus niaga ini yang menimbulkan sebab untuk mengesyaki bahawa urus niaga tersebut adalah palsu dan/atau melibatkan hasil daripada aktiviti yang menyalahi undang-undang?

6.

Dalam mengkaji semula keadaan lain bagi urus niaga yang dicadangkan, adakah anda menimbangkan atau memberikan perhatian kepada:

YA TIDAK 6.1 6.2 6.3 Kelompangan atau elemen yang hilang dalam urus niaga. Nama yang tidak padan atau penyamaran. Ketakselarasan dengan apa yang boleh dijangka daripada urus niaga tersebut. 6.5 6.6 6.7 6.8 Elemen yang tidak dapat dijelaskan. Apa-apa keengganan luar biasa untuk memberikan maklumat. Apa-apa maklumat yang diberikan yang menimbulkan keraguan. Apa-apa elemen yang menyebabkan urus niaga tampak tidak lazim atau luar biasa. 6.9 Apa-apa elemen khusus, tersendiri atau berbeza sama sekali yang diberikan oleh mana-mana pihak yang menjadikan urus niaga tersebut khusus dan tersendiri. 6.9 Apa-apa permintaan tidak lazim atau luar biasa terhadap kerahsiaan.

6.10 Apa-apa sikap bersahaja berhubung dengan perkara penting.

7.

Adakah terdapat apa-apa perkara berhubung dengan keadaan lain dalam urusniaga yang dicadangkan itu yang menimbulkan sebab untuk mengesyaki bahawa urus niaga tersebut adalah palsu?

D. 8.

PROGNOSIS URUS NIAGA Berdasarkan kajian semula ke atas urus niaga yang dicadangkan, adakah anda mempunyai apa-apa kebimbangan terhadap urus niaga yang dicadangkan?

YA TIDAK

9.

Jika jawapan bagi Soalan 8 ialah YA, sudahkah anda membincangkan kebimbangan anda dengan mana-mana peguam bela dan peguam cara lain di syarikat anda?

10.

Apakah kesimpulan yang boleh anda ambil berhubung dengan kebimbangan ini? Adakah anda merasakan, secara khususnya, bahawa Laporan Urus Niaga yang Meragukan perlu dibuat?

Bar Council Guidelines on Anti-Money Laundering & Anti-Terrorism Financing

The Reporting Obligation 1. Section 14(b) of the Anti-Money Laundering Act 2001 (Act 613) imposes on a reporting institution an obligation to report a transaction: ... where the identity of the persons involved, the transaction itself or any other circumstances concerning that transaction gives any officer or employee of the reporting institution reason to suspect that the transaction involves proceeds of an unlawful activity.

2.

Reference should be made to the legislative Overview of Reporting Obligation published by the Bar Council Task Force on Anti-Money Laundering and Anti-Terrorism Financing (the Task Force).

Transactions Affected 3. On 30 September 2004, this obligation to report suspicious transactions was imposed on the advocate & solicitor in the following specified areas of activities: a. b. c. d. e. f. buying and selling of immovable property managing of client money, securities or other property managing of accounts including savings and securities accounts organising of contributions for the creation, operation or management of companies creating, operating or managing of legal entities or arrangements and buying and selling of business entities and as a company secretary in the course of providing any of the following services to third parties: i. ii. acting as a formation agent of legal entities acting as (or arranging for another person to act as) a director or secretary of a company, a partner of a partnership, or a similar position in relation to other legal entities providing a registered office, business address or accommodation, correspondence or administrative address for a company, a partnership or any other person or arrangement acting as (or arranging for another person to act as) a trustee of an express trust acting as (or arranging for another person to act as) a nominee shareholder for another person

iii.

iv. v.

Anti-Money Laundering & Anti-Terrorism Financing

Compliance Guidelines

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Compliance Guidelines 4. 5. These guidelines are intended to aid the advocate & solicitor in his compliance with the obligation to report suspicious transactions encountered in his work in the specified areas. As the circumstances giving rise to an obligation to report is couched in objective terms and the obligation is to make the report promptly, the advocate & solicitor should undertake specific measures to ensure that neither he nor his partners or employees come in danger of non-compliance with the duty to report. The burden is made all the more heavy on him by the vicarious liability (for the acts and omissions of partners, legal assistants and other employees) which appear to be intended to be imposed by sections 87 and 88 of Act 613. It is recommended that measures for compliance with the reporting obligation be taken in the following areas: a. b. c. 7. in office procedures exception handling scrutiny

6.

In support of these direct measures, education and training in this area of compliance should be implemented through:a. b. c. information dissemination and updates national and worldwide developments in money-laundering and terrorism financing training of advocates & solicitors, legal clerks and other office staff procedures to profile the 3 areas of each transaction which may give rise to a reason for suspicion: i. ii. iii. the identity of the parties, the transaction itself, and any other circumstances concerning the transaction.

8.

Reference should be made to the Compliance Framework recommended by the Task Force.

Profile on Client 9. A profile on the identity and background of the client and other persons involved in the transaction should be compiled for each transaction as a matter of course in accordance with a formal procedure implemented in the office. The profile on the client should include information and documents such as:a. b. c. d. names and aliases identification documents such as identity cards and passports place of residence particulars of employment
Compliance Guidelines

10.

Anti-Money Laundering & Anti-Terrorism Financing

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e. f. g. h. 11.

occupation and business activities country of origin and residence company registration number tax and revenue references

In the case of the client who is not a Malaysian citizen or resident: a. b. connection with Malaysia history of acquaintance and development of relationship with Malaysian individuals and entities.

Profile on Other Parties 12. In the case of other parties involved in the transaction, it may not be convenient or appropriate to demand information to the same extent but information should be gathered along similar lines. In any case, an advocate & solicitor is entitled as against any party to expect a reasonable amount of information in order to enable him to verify if nothing else the identity and the validity of such acts and deeds of the party involved as may affect the interests of his client.

13.

Profile on Transaction 14. The profile on the transaction itself should include reviewing:a. b. c. d. e. f. g. whether any party is or appears to be a mere nominee or agent the intended effect of the transaction the purport of documents used in the transaction the consideration or bargain whether the purport of the documents are consistent with the intended effect of the transaction whether any aspect of the transaction is in any way misdescribed or is a misnomer whether the consideration appears to be real and sufficient on an arm's length basis or for some acceptable reason is not unusual.

Profile on Other Circumstances 15. The profile on other circumstances concerning the transaction should include:a. b. c. d. lacunas or missing elements in the transaction misnomers and disguises inconsistencies with what would be expected of such a transaction unexplained elements
Compliance Guidelines

Anti-Money Laundering & Anti-Terrorism Financing

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e. f. g. h. i. j. Vigilance 16.

noting any unusual reluctance to provide information noting any information provided which invites scepticism noting any element which gives the transaction an unusual or extraordinary aspect noting any special unique or exclusive elements provided by any party as rendering the particular transaction special unique noting any unusual or extraordinary requirements for secrecy and confidentiality noting any casualness with matters of importance

The financial institutions are at the forefront of the gatekeepers drawn into the antimoney laundering regulatory regime and would most likely have filtered out many of the more obvious attempts at legitimising illegal proceeds. Therefore, the advocate & solicitor should be vigilant that no client or party be allowed to exploit his position and stature and privilege to lend legitimacy to a transaction involving illegal proceeds.

Anti-Money Laundering and Anti-Terrorism Financing Task Force Bar Council Malaysia 06 May 2005

Anti-Money Laundering & Anti-Terrorism Financing

Compliance Guidelines